Surviving in a Dying Industry by Using the Toyota Way

The U.S. coffin manufacturing industry, like so many other domestic goods producing industries, has undergone hard times. First of all, people are living a lot longer. Thus, demand for caskets has declined. Second, more people are choosing cremation rather than opting for the traditional—and more expensive—burial. Finally, customers are buying less expensive coffins from China. All of these factors combined have dampened demand. U.S. casket sales peeked by volume in 2000 at 1.9 million. Since then, they have declined by 11%, to 1.69 million in 2009. (Wall Street Journal).

Despite these trends, the Batesville Casket Company has been able to survive, even prosper.

Symbol of the Company That Pioneered the Toyota Production System (TPS)

And they have done so, in part, because in 1995 they adopted the Toyota Way—known also by such names as the Toyota Production System (TPS), just-in-time (JIT), lean operations.

The Toyota Way—as originally conceived by Toyota Motor Corporation—is focused on the elimination of all waste from the automobile manufacturing process. Here are the 7 typical wastes, or inefficiencies, which are part of anymanufacturing or service process:

Overproduction

Waiting time

Unnecessary transport or conveyance

Overprocessing or incorrect processing

Excess inventory

Unnecessary movement

Defects

This lean philosophy has been used to reconfigure the assembly line at the Batesville plant in Manchester, Tennessee. Using touch screen computers and bar codes, the workers on the line assemble 1,000 custom caskets per day, choosing from 22 possible colors along with thousands of personalization options. The assembly line has been reconfigured into a pull system, where material is ordered only when it is needed by the customer. 98% of the 224 parts that go into assembling a coffin are produced on site.

Reduction of waste and defects can be accomplished by simplifying processes. The Manchester plant employs visual signals that facilitate ordering the correct materials. In an article in the Atlantic Monthly, Mary Jo Cartwright, the plant’s director of operations, described how a new worker to the interiors line asked about how she was suppose to do her job of resupplying the seamstresses. “Visual displays were everywhere; sheer material for mattresses and canopies hung from color-coded racks that simply needed to be matched with corresponding colors. ‘This is kindergarten,’ the worker said.”

Improving the efficiency of a process can also be achieved by substituting technology for labor. Previously, a worker lifted the 65 lb lid of each casket over 500 times a day. Batesville improved worker safety—while simultaneously increasing productivity—by replacing several people with two giant robotic arms.

As a result of the adoption of lean operations, the Manchester plant has reduced manufacturing costs by 25% over the past 15 years. At the same time, the labor hours required to build a coffin have been reduced by 40 percent. (Industry Week)

The practice of continuous improvement (kaizen in Japanese) isanother element of just-in-time. It is the belief that “there is no best, only better.” The Manchester, Tennessee factory’s 370 associates—the term that the company uses to describe its factory workers—are empowered to improve their work on a daily basis. In 2008, two busloads of Batesville Casket Company employees traveled to Georgetown, Kentucky to study how the line workers participate in continuous improvement.

Rather than trying to hit the big home run, the workers at the Batesville Casket Co. attempt to hit many singles: they are empowered to focus on improving their work, day-in and day-out. In terms of output quality, the continuous improvement philosophy has paid off in spades. In 1999, 20% of the caskets produced had a defect; today, the numbers of defects coming off the line are less than 1%.

Waste elimination and continuous improvement are two of the pillars of the Toyota Way. But the final, foundation-piece required is Respect for People. The employees are the ones who have the best ideas for improving their job processes; yet, if, as a result of a suggestion, an employee is “laid off,” what motivation would anyone have for making recommendations for process improvement? The workers at the Manchester, Tennessee factory are represented the United Steelworkers union. At this site, management agreed that no factory associate would lose their job as a result of a kaizen event, which is a workshop that challenges a cross functional team to design or improve a designated process. This promise—coupled with the reality that the home office is closing plants that are inefficient—-has resulted in the realization that success requires that everyone must work together.

Toyota Motor Corporation stumbled in 2010, losing its way by recalling over 10 million vehicles. Despite this reality, the business philosophy that Toyota developed—today known as lean operations—is still valid. The top management team in Toyota City, Japan have simply taken their eye off the ball.

In addition to becoming the dominant operations strategy of US manufacturers, lean operations is rapidly being adopted by the service industry as well. Batesville Casket Co., the worlds’ #1 casket manufacturing company, is a good example of the success of this strategy. Last year’s sales and profits were $749 million, and $111 million, respectively. For a dying industry, lean is the precise remedy that any good doctor would order.